Fair Labor Standards Act

Summary

The Fair Labor Standards Act (FLSA), sometimes called the minimum-wage law, is a federal law that protects the rights and wages of certain employees. The law applies to companies with an annual volume of business of $500,000 or more. It requires employers to do all of the following:

Pay a minimum wage on a regularly scheduled payday. In 2009 the federal minimum wage for most employees was raised to $7.25 per hour. Individual states may have their own minimum-wage laws. Where these differ from federal law, the higher rate applies.

Pay overtime after 40 hours of work. Employees must be paid one and one-half times their regular rate of pay for all hours worked in excess of 40 hours in a workweek. Overtime compensation must be based on an average hourly rate, even if the employee is otherwise paid on a non-hourly basis. For most private businesses, overtime must be paid in cash and not compensatory (or "comp") time.

Provide equal pay for equal work.

Abide by special rules for workers under the age of 18.

Employers need not pay the minimum wage or overtime rates to workers referred to as "exempt" employees, including (1) executives, highly compensated employees and owners of 20% or more of their business; (2) learned or creative professionals; (3) administrative employees; (4) computer employees; and (5) outside salespeople.

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